What is Debt Negotiation? Debt Negotiation
is a method to settling your old bills and collections accounts without filing a bankruptcy or joining a debt management company. Many people are skeptical that you can negotiate collection accounts with creditors.
Many consumers get resigned that their debt situation is out of control and that there is no hope to get out from under it. Most assume that their only option is to talk to a lawyer about filing for bankruptcy protection. Many people are just plain scared of the bill collectors that continually hound them. Collection agencies want you to believe that you are facing an impending doom. This could range anywhere from seizure of property to garnishment.
Debt Negotiation Is Not Understood
What most consumers fail to realize is that for these actions to be enforceable, they must take you to court first. This fear will drive people to seek out the possibility of filing a bankruptcy. For many, the debt negotiation process could provide benefits (improving credit without bankruptcy), but never get realized because the debt negotiation process is not understood, or that it is even possible.
Creditors Do Not Want To Go To Court
Creditors do not really want to take you to court. It is expensive for one; the other thing is that even if they win, it can be difficult for them to collect from you. If they were to garnish your wages, you could simply move jobs and they would have to start the process all over again. Going to court is not free, they have legal fees that have to be paid whether they win or not. They do not want to throw more good money after bad. Creditors want to settle for this reason.
Bankruptcy – A Measure Of Last Resort
Most people are not educated about the consequences of having unpaid debts. A creditor can sue you but in most cases they would rather not. I would never tell you to not worry about it because the reality is that you can get sued, have your wages garnished, and have your property seized. For them to go to this extreme however, you must owe them a lot of money.
Negotiate – Remember Something Is Better Than Nothing
In most cases a creditor or collection agency is more than happy to take a reduced lump sum settlement. In many cases debt just never gets collected ever while negative credit remains on the person who owes the debt's credit report. From this standpoint a creditor is happy just to get something rather than nothing. If you file for a bankruptcy in most cases they won't collect anything from you. They would rather get something than nothing so they do have an incentive to work with under that tough attitude they give.
Check The Statute Of Limitations Before You Pay Off A Collector
A bill collector only has a certain time period to sue you for non payment of a debt. The first thing that you need to due is to check the statute of limitations for the particular debt that you are concerned about. If the debt is older than the statute of limitations for collecting a debt in your state, just tell them that they are wasting their time and you do not have to pay them. You need to check with your state to see what the time limits are in your state. Usually after 7 years they cannot collect legally anymore. Any negative marks that are on your credit bureau should be removed. If the debt does not show on your credit bureau and you are past the statute of limitations, you are home free. Just mention the FTC.
Debt Negotation Is Good For Certain Types Of Debt
Debt negotiation is mostly for unsecured debts such as medical bills, personal loans, bad checks, hospital bills and credit cards. If you stop paying your mortgage or car payment, the creditor will probably foreclose on your home, or repossess your car whatever the case may be. With unsecured debt, there is no security there is nothing to take from you – except maybe cash.
If you are interested in more debt negotiation see GetPreQualified.com’s section on Debt Negotiation.
